The Investment U E-Letter: Issue # 312
Thursday, February 12, 2004 Investing in Wine: Returning 522%, Some Wines Are Outpacing Stocks
By Dr. Steve Sjuggerud, President, Investment U "Let's face it, in a worst-case scenario, you can literally drink your investment into oblivion…" ~ Eric Roseman Up 522% in the last 10 years… If you've never given thought to investing in wine, just look at a recent issue of Global Mutual Fund Investor. My friend Eric Roseman points out that First Growth Bordeaux wine (1990 vintage) has risen by 522% over the last 10 years, beating out stocks. Roseman says, "Some of the world's finer vintages have severely outpaced the S&P 500 Index - especially from 2000 to 2002 when the American broader market crashed 40%. Wine truly has no correlation whatsoever to the S&P 500 Index and offers key asset allocation diversification as an investment…" According to Forbes.com: "The world's most expensive bottle of wine that could actually be drunk today is also the most expensive wine ever sold in America, a Montrachet 1978 from Domaine de la Romanée-Conti that was hammered down at Sotheby's in New York in 2001. The lot of seven bottles fetched $167,500, or $23,929 per bottle."
The NYSE of the Wine Investing World The wine investing market is actually developing into a "pseudo stock exchange" for finer vintages, Roseman says. For example, "The WorldWineXchange.com offers secure trading in fine wine to international buyers and sellers on a real-time, first-come, first-served basis." Whether it's a joke or it's serious, there's actually a wine price "ticker" running across the bottom of the web page. The wine investors themselves don't see wine investing as a joke at all… They see a supply of fine wines from good years constantly shrinking… pushing prices ever higher. It's Economics 101, they say - supply is falling while demand is increasing. If you're into wines, you may get a kick out of a few web sites that are out there… Although I'm no wine expert, I found these sites interesting. Robert Parker's newsletter is popular, as well, as a high rating from him will almost guarantee high demand for a wine. But I'm getting out of my area of expertise here. Honestly, I know nothing about wine - I'm not joking. But I got a kick out of my friend's article about wine as an investing strategy. In particular, I liked Eric's view about the upside of the downside… "Let's face it, in a worst-case scenario, you can literally drink your investment into oblivion!" Today's IU Cribsheet - I mention world-renowned wine critic Robert Parker above. You can read more about this fascinating guy by visiting www.erobertparker.com. You'll find a great deal of information about the drinkable investment.
Good investing (or, if it doesn't work out, drowning your sorrows), Steve Related Articles: Investment U Archives
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